When Crosby, Still Nash and Young penned the words to the song, Teach your Children Well, they could have been talking about the importance of educating children about matters financial and particularly about property ownership.
If you think about it, there are so many good reasons for youngsters to climb onto the property ladder as early as possible. Apart from the obvious benefits of owing their own bricks and mortar, ownership brings financial responsibility, particularly at a time where banks are demanding that buyers take more accountability by insisting on heftier deposits than before.
In a recent report released by John Loos, a property market strategist at FNB, indications are there that younger people are once again entering the property market after the numbers dropped significantly in 2006. It appears that rising property prices were the main reason for the decline; however, while they may not be back with an absolute vengeance, the younger generations are finding it easier to find homes that are more affordable and are once again looking at property as a ‘must have’ rather than ‘I wish I had.’
It makes sense to invest in property while you are young. Most youngsters have not yet started a family and therefore have far more financial flexibility than those who have more onerous responsibilities. However, given South Africa’s dismal record as savers, many have found to their detriment that owning a home is far more expensive and - if their credit record is not up to scratch - far more difficult than it was before.
In a world where instant gratification is the norm you cannot help but think that youngsters have been exposed far more to irresponsible lending by the various credit providers than their older, perhaps wiser, counterparts. American college students had been getting themselves into trouble for years after having streams of seemingly unlimited credit thrown their way and for a time at least, South African youngsters suffered a similar fate. The fact that such a large number of South African’s have bad credit ratings clearly shows that somewhere along the line SA credit providers lost the plot and were willing to give everyone and anyone additional finance in some form or another.
Sadly, it is the parents themselves that are often left holding the proverbial baby. Unable to meet the growing demands of paying loans that perhaps should never have been granted in the first place often has repercussions for the entire family.
The key to solving the entire issue could rest in educating your children in financial matters long before they start working. While the issuing of pocket money may help teach children the value of money, parents should endeavour to take the matter much further and from an early age should be discussing the benefits of investing, budgeting and perhaps most importantly, saving for that inevitable rainy day.
You may have heard this all before, but judging by the miserable savings records of most South African’s we need to go back to the drawing board and rectify the damage caused by years of reckless lending and carefree living. Get it right and your children will not only fly the coop, they will do so with confidence, buying their own nest and starting their adult life with their foot firmly placed on the first rung of a stable property ladder.